July 2018

KOLKATA: The Shining Star of the East 02 : THE SHINING STAR OF THE EAST Foreword

ANUJ PURI Chairman

ANAROCK Property Consultants

Kolkata, the ‘City of Joy,’ not only resonates its rich old-world-charm, but also infuses a perfect blend of modernity with traditionalism. The city’s residential real estate development has come a long way and has emerged as the key affordable housing destination of India with around 62% of new units added between 2013 and Q1 2018 being priced less than INR 40 lakh.

Being the British Capital of India, Kolkata is still dotted with old British architecture, royal buildings like Victoria Memorial and even the most famous Indian Coffee House, rendering a feel-good factor. Keeping in tune with the changing facade of most metros due to rapid Furthermore, fast-paced development of the urbanization and increase in multi-faceted INR 5,000 crore East-West Metro Corridor, developments, the city’s real estate market has connecting Salt Lake to Howrah and the CBD, also metamorphosed over the last decade. is already underway. Other than connecting the southern and northern fringes of the city via The recent push by the metro and providing a lifeline for many office- government to accelerate infrastructure goers, further extension of East-West Metro development in the city is likely to bode well from Salt Lake City to NSC Bose Airport is also for the overall real estate market. For instance, being contemplated. All-in-all, these multiple to establish seamless connectivity, the state infra upgrades are likely to enhance the city’s government has undertaken multiple projects quality of life which will invariably propel real including the widening and extension of arterial estate growth in Kolkata in the near future. and secondary roads along with construction of flyovers and pedestrian underpasses across Other factors driving the city’s real estate the city. Various international companies are in growth include the rising demand by IT-ITeS the fray to collaborate with the government. and BFSI sectors. KOLKATA: THE SHINING STAR OF THE EAST 03

Relatively affordable property prices coupled In this report titled Kolkata: The Shining with the government’s push for development Star of the East, we have analysed the major is attracting several IT majors to the city which trends emerging in the ‘City of Joy’. In one of is giving a major boost to the city’s residential the major developments, ‘affordable housing’ market with investors and homebuyers making has gained significant traction in the city a beeline for investments. Besides the city during the past few years. Following the center areas, micro markets such as increasing demand for basic housing, the state New Town and Salt Lake City have witnessed government has also given a major push to this rapid real estate development over the past segment by recently introducing a new housing several years. The former is today home to scheme ‘Nijoshree.’ The scheme will provide several reputed IT majors including Cognizant, homes under two categories to people whose Tech Mahindra, IBM, Genpact, Hewlett-Packard, monthly income is above INR 15,000 and Wipro and TCS, amongst others. above INR 30,000 and, thereby, further boost affordable housing in the city. 04 KOLKATA: THE SHINING STAR OF THE EAST City Snapshot

Located on the eastern bank of river Hooghly, 24,500/km2 14M Kolkata is the capital Density of people Total population within of West Bengal Kolkata Metropolitan Area (as of 2011 census)

rd 185km2 3 4.5M Area most populous Total population metropolitan area in India within Kolkata City KOLKATA: THE SHINING STAR OF THE EAST 05

Calcutta Stock Exchange Opened in An economic hub to nearly (CSE) is India’s rd 1870 1,000 3 the is industries - textile, largest bourse not only India’s oldest mining, pharmaceuticals, operating port, but also manufacturing, IT-ITeS, a major riverine port defense, food processing, and heavy engineering

Kolkata is a commercial, cultural, and educational center of East India. Besides Mumbai and Chennai, the city also acts as a major primary warehousing hub in India. 06 KOLKATA: THE SHINING STAR OF THE EAST City’s Development Timeline

KEY HIGHLIGHTS

Calcutta Metropolitan Development Authority Development of Kolkata’s Capital of India Basic development (KMDA) published the 1st planned residential area was shifted to New plan of the city was perspective development (Chowringhee-Park St. areas) Delhi from Kolkata published of plan of the city

1640 1700 1854 1912 1966 1986 1975 1976

Hooghly was Howrah Railway Development of occupied by Terminus satellite towns such as airport was English traders was opened Salt lake and Kalyani began opened KOLKATA: THE SHINING STAR OF THE EAST 07

Before Independence (Pre-1947) After Independence (Post 1947) New Millenium India

K.M.P.C published KMDA proposed Under Ministry of perspective vision plan development plan Urban Development, 2025 which envisioned for Kolkata with Kolkata was covered multi-nodal strategy vision 2025 under AMRUT

1984 2001 2005 2007 2008 2015 2018

Metro became Revitalisation of the JNNURM New Town Kolkata Expected completion operational for city’s economy with urban Development of 1st phase of Eastern commercial development of IT- development Authority Act, 2007 Dedicated Freight services ITeS companies plans began was passed by West Corridor by Aug 2018 Bengal Legislature (benefitting Kolkata in the logistics sector)

Major Infrastructure Initiatives

State government of Kolkata under JNNURM has planned for the following physical infrastructure development:

ROADWAYS: Extension and widening of the arterial roads, construction of pedestrian pathways, bridges, flyovers and elevated roads throughout the city. Broadening and strengthening of the secondary roads of the city to address the increasing population and enhance connectivity.

METRO: Connecting Salt Lake to Howrah as well as CBD areas, state government has planned a further extension of East-West Metro, which is under progress and worth INR 5,000 Cr.

E-CONNECT: Kolkata offers 580Mbps of communication infrastructure to the citizens with the intention of enhancing the quality of life.

NIJOSHREE HOUSING SCHEME: Post the success of “Banglar Bari’ a rehabilitation scheme for the slum dwellers, state government has launched a new housing scheme ‘Nijoshree’ to satisfy the housing demand and boost affordable housing. 08 KOLKATA: THE SHINING STAR OF THE EAST Kolkata: Zonal Classification

Kolkata is broadly divided into five zones:

CENTRAL: Central Kolkata hosts the Central Business District (CBD) and also an upmarket retail hub with significant high-end residential developments

EAST: The eastern part comprises of newly-developed areas

WEST: West Kolkata is witnessing the emergence of various new commercial developments

NORTH: North zone is one of the oldest regions in Kolkata comprising of dilapidated buildings, crowded bazaars, overpopulated slums and narrow alleyways

SOUTH: South Kolkata, predominantly a residential region, also comprises of upscale neighborhoods KOLKATA: THE SHINING STAR OF THE EAST 09

Netaji Subhash Chandra Bose 1 North International Airport

2 Railway Station

3 Bus Terminus

4 Port Trust

Arterial Road Network

Hooghly River

1 West 2

3 East 4

South

Central

Not to scale, for reference only. 10 KOLKATA: THE SHINING STAR OF THE EAST Residential Real Estate Dynamics

2013 - Q1 2018

Between 2013 and Q1 2018, 119,000 residential Whilst absorption also declined due to the units were launched in Kolkata, of which 68% overall impact of structural changes and policy were added between 2013 and 2015. reforms, the dip was not as significant as that in new launches. In fact, the annual absorption With the rising unsold inventory due to improved by 3% in 2017 as compared to 2013, declining demand amidst the impact of policy indicating that the restricted supply and rising reforms such as DeMo, RERA and GST, new demand was impacting the market positively. launches dipped significantly post 2015, and the annual new supply addition declined by 2016 and 2017 saw a notable trend wherein 41% in 2017 as compared to 2013. absorption was almost at par with the total supply, thus reverting market sanity. Whilst Around 78,000 units were absorbed in Kolkata, Kolkata saw restricted supply post 2015, the of which 57% sales materialized between 2013 unsold inventory had already piled up and the and 2015. city had nearly 51,000 unsold units as of Q1 2018.

Figure 1: Supply-absorption trend Figure 2: Unsold inventory trend

Source: ANAROCK Research

Source: ANAROCK Research

Kolkata accounts for 7% of the overall unsold inventory across India’s top 7 cities (Q1 2018) KOLKATA: THE SHINING STAR OF THE EAST 11

Figure 3: Zone-wise residential unit launches (2013-Q1 2018) Figure 4: Zone-wise residential unsold units (Q1 2018)

1% Central 10% 34% West East

8% West

35% East

35% South 51,000 No. of unsold residential units in Kolkata (Q1 2018)

22% North 35% 20% South North

Zone-wise residential units launches (2013-Q1 2018) Source: ANAROCK Research Zone-wise residential unsold units (Q1 2018) 12 KOLKATA: THE SHINING STAR OF THE EAST Residential Real Estate Deep Dive

SUPPLY

Trends clearly indicate that affordable housing Figure 5: Budget-wise supply trend (< INR 0.4 Cr) dominates the property spectrum in Kolkata and there has been a gradual increase in its supply over the years. This was followed by the supply in the mid- segment (INR 0.4-0.8 Cr units).

Of the overall supply between 2013 and Q1 2018, affordable segment accounted for around 64%, followed by mid-segment at 23%.

Recently announced state government initiatives like ‘Nijoshree’ housing scheme, dedicated funds for affordable housing announced by the central government and reduced GST rates for affordable housing primarily led to the boost in affordable housing supply.

ABSORPTION

Following the home buyer demand for affordable housing, developers were quick to launch projects in this category. Hence maximum absorption was observed in Source: ANAROCK Research < INR 0.4 Cr budget since 2013 to Q1 2018, followed by INR 0.4-0.8 Cr budget segment. Figure 6: Budget-wise absorption trend

UNSOLD INVENTORY 4% 8% With the drop in sale from 2016 end to mid- 2017, due to the impact of triple tsunami of DeMo, RERA and GST, there’s a significant pile-up of unsold inventory in Kolkata. Majority of the units are in < INR 0.4 Cr budget segment 26% 62% due to ample supply in the affordable segment.

In terms of unsold inventory ageing pattern, only 9% of the units are ready-to-move-in, whereas more than 50% units are due to complete in the next 2 years giving significant options to the home buyers.

Source: ANAROCK Research KOLKATA: THE SHINING STAR OF THE EAST 13

Affordable housing (< INR 0.4 Cr budget segment) dominates the property spectrum in Kolkata (2013-Q1 2018)

Figure 7: Budget-wise unsold units (Q1 2018) Figure 8: Unsold inventory as per completion timelines

5% 8%

19%

68%

Source: ANAROCK Research Source: ANAROCK Research 14 KOLKATA: THE SHINING STAR OF THE EAST

Netaji Subhash Chandra Bose East Zone International Airport

KEY HIGHLIGHTS Rajarhat Road (SH 3)

SH 3 Prominent micro-markets: Rajarhat New Town - Salt Lake City (or Bidhaan Nagar) Tangra EM Bypass - Rajarhat New Town (or Nagar) Salt - EM Bypass Lake City

EM Bypass and Rajarhat Road are the arterial roads, running along the eastern rim of Kolkata. Basanti Highway EM Bypass connects Ultadanga (North) to the Kamalgachi (South) and also Bidhaan Nagar in the north-east to southern parts.

GROWTH STIMULATORS

- Well-planned existing/upcoming road Figure 9: East Kolkata supply-absorption trend network - Noapara to New Garia metro corridor and the upcoming corridors under phase 2 enhance the connectivity quotient of the region - EM Bypass facilitates smooth connectivity to various part of Kolkata - Proximity to IT-ITeS establishments at Sector V in Salt Lake - Presence of Central Business District (CBD) in Action Area II of Rajarhat New Town

RESIDENTIAL REAL ESTATE DYNAMICS

Prominent micro-markets such as Rajarhat New Town, EM Bypass, Tangra and Salt Lake City in east Kolkata, account for 34% of the total supply in the city.

Prime residential developments within this Figure 10: Budget-wise unsold units (Q1 2018) zone witnessed a major jolt during 2017 due to multiple reformatory changes brought in 2016. There was a 60% drop in absorption from 2016. 7%

Being a prime hub for townships, retail and 14% economic activity coupled with good physical and social infrastructure facilities, east zone picked up pace wherein 3,750 units were 56% launched in Q1 2018, accounting for more than 50% of the overall supply infusion in the city during this quarter. 23%

As of Q1 2018, eastern zone had 18,000 unsold units, accounting for 35% of the city’s overall unsold stock.

Source: ANAROCK Research KOLKATA: THE SHINING STAR OF THE EAST 15 North Zone

(SH 6) KEY HIGHLIGHTS

SH 13

Prominent micro-markets: SH 1

- Grant Kalyani - Dum Dum Expressway - Uttarpara SH 2 - Barrackpore Barasat - Uttarpara Belgharia , ,

Kalyani Expressway, , (NH 12) and SH 13 are the arterial roads in Jessore Road

BT Road BT Belghoria Expressway the north zone. The north peripheries comprise of industrial units of jute, tannery, glass, iron North Dumdum and steel rolling amongst many others. Figure 11: supply-absorption trend Dum Dum is considered to be a key hub of Kolkata due to its proximity to the airport, Metro rail north terminal, ground rail and circular rail.

GROWTH STIMULATORS

- Existing and upcoming metro rail network to enhance connectivity with rest of the city - Proximity to Rajarhat New Town is a major growth driver of this zone - Presence of excellent road network and planned widening of existing road network. - Proximity to Netaji Subhas Chandra Bose International Airport

RESIDENTIAL REAL ESTATE DYNAMICS

North zone accounts for 20% of the total city’s Figure 12: Budget-wise unsold units (Q1 2018) supply added from 2013 to Q1 2018. 1% Due to the impact of triple tsunami of reforms, 5% 2017 supply dropped by 62% from 2016. Existing unsold inventory of around 11,000 18% units also impacted the addition of new supply. Nevertheless, Q1 2018 started on a positive note with fresh supply of 900 units. 76% As of Q1 2018, north zone accounts for 22% of the city’s overall unsold stock.

Source: ANAROCK Research 16 KOLKATA: THE SHINING STAR OF THE EAST South Zone

EM Bypass

KEY HIGHLIGHTS Kalikapur

Prominent micro markets: Joka Garia - Kalikapur - Garia Diamond Harbour Road (NH 12) Narendrapur - Narendrapur - Joka - Baruipur Baruipur (SH 1) A part of EM Bypass, Gariahat Road and Diamond Harbour Road are the arterial roads in the southern zone. This region predominantly comprises of residential developments and huge number of educational establishments. Gariahat in is considered to be the biggest retail market of south Kolkata. Figure 13: South Kolkata supply-absorption trend

GROWTH STIMULATORS

- Upcoming metro rail network under phase 2 to provide hassle-free connectivity to the residents of southern Kolkata - Various flyovers are being constructed to reduce traffic congestion in the region

RESIDENTIAL REAL ESTATE DYNAMICS

Southern zone accounts for 35% of the total city’s supply, which is the highest amongst all zones from 2013 to Q1 2018.

Due to the presence of educational institutes, retail developments and good connectivity, despite the impact of reforms, southern zone supply in 2017 improved by 55% from 2016. Figure 14: Budget-wise unsold units (Q1 2018) Q1 2018 also opened on a positive note with 1,800 units’ addition, making the zone second highest in terms of supply in this quarter. 5% 5% With 17,000 unsold units as of Q1 2018, southern zone accounts for 35% of the city’s 19% unsold inventory.

71%

Source: ANAROCK Research KOLKATA: THE SHINING STAR OF THE EAST 17 West Zone

Belghoria Expressway (NH 12) SH 15

KEY HIGHLIGHTS Makardaha Bandhaghat Howrah Prominent micro markets: NH 16 Santragachi - Maheshtala NH 6 - Santragachi - Howrah - Makardaha - Bandhaghat Maheshtala A section of Belghoria Expressway (NH 12), NH 6, NH 16, SH 15 and Kona Expressway are the arterial roads in the western zone. Kona Expressway in the region is part of the project which connects the four largest Indian metros: Delhi, Mumbai, Chennai and Kolkata. Figure 15: West Kolkata supply-absorption trend GROWTH STIMULATORS

- The stretch along Kona Expressway near is likely to witness rampant developments due to excellent connectivity with Delhi and Mumbai highway - Upcoming metro rail network from eastern Kolkata till Howrah to drive the residential development of this region - Proximity to various National Highways and Kona Expressway is likely to boost the industrial/commercial development in this zone

RESIDENTIAL REAL ESTATE DYNAMICS

This zone accounts for 10% of the total city’s supply added from 2013 to Q1 2018. Figure 16: Budget-wise unsold units (Q1 2018) Due to the commercial development, physical infrastructure and public transport network, even amidst the impact of reforms, western 7% zone supply in 2017 improved by more than 100% from 2016. 10%

As of Q1 2018, West zone has 4,000 unsold units accounting for 8% of city’s unsold inventory.

83%

Source: ANAROCK Research 18 KOLKATA: THE SHINING STAR OF THE EAST Top 5 Residential Hotspots

Netaji Subhash Chandra Bose 1 North International Airport

2 Railway Station

3 Bus Terminus

4 Port Trust

Arterial Road Network

Hooghly River

Barasat

1 West Rajarhat 2 New Town EM Bypass 3 East 4

Garia Joka

South

Central

Not to scale, for reference only. KOLKATA: THE SHINING STAR OF THE EAST 19

Hotspot Zone Supply % of Price Dominant of units total city (INR/sf) Budget (2013-Q1 supply in Segment 2018) Q1 2018 (INR)

BARASAT North 2,350 2% 2,000 < 0.4 Cr This locality is witnessing an to improvement in its physical and social infrastructure facilities, 2,400 which is likely to bode well for Barasat in the years to come.

EM BYPASS East 5,100 4% 6,300 0.8 - 1.5 An important arterial road that to Cr connects in north east to Kamalgazi in south. 6,900 Its close vicinity to economic hubs, with good physical and social infrastructure, is boosting real estate development in this area. Convenient access to nearby commercial centres and upcoming metro network are adding value to the location.

RAJARHAT NEW TOWN East 34,400 29% 4,700 < 0.4 Cr A booming cosmopolitan to township located near the international airport, has good 4,800 connectivity to transport hubs and houses major IT economic destinations in its vicinity. It possesses a well-developed physical and social infrastructure.

JOKA South 7,600 6% 2,700 < 0.4 Cr This strategic location has to ample public transport facilities, metro connectivity, good social 3,100 & physical infrastructure. As a result, residential real estate activity is upbeat. Joka is well- connected to Kolkata, via two four-lane highways, Diamond Harbour Road and James Long Sarani.

GARIA South 3,000 3% 3,500 0.4 -0.8 This location is well-connected to Cr to important destinations of the city and is in close proximity 3,800 to major economic hubs. With the development of New Garia – Airport Metro link and social infrastructure, the location is touted to be a suburban residential hotspot. For research services, please contact:

Prashant Kumar Thakur Head of Research [email protected]

Our Authors

Virendra Joshi VP, Research [email protected]

Shruti Merwade Assistant Manager, Research [email protected]

Our Editor

Priyanka Kapoor AVP, Research [email protected]

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